The document summarizes a case study on the merger between Vivendi and Seagram. It provides details on: 1) Vivendi originally started as a water company that was transformed into a multimedia conglomerate by Jean-Marie Messier. 2) Seagram was a global beverage and entertainment company based in Montreal. 3) Jean-Marie Messier's aggressive acquisition strategy based on debt led to integration challenges and ultimately the failure of the merger due to huge debt levels and doubts around Vivendi's accounting.

1. Confidential
ESC RENNES Executive MBA in Cairo
COHORT (1) –2003-2004
- Course Title and Date:
International Finance – Group Assignment
11, 12, 13 June 2004
- Presented to: Dr. Tess Taubler
- Authors (Group Members):
Magdy A. Sattar
Abd El-Hameed Mohamed
Yasser Kortam
- Date of Submission: 29 September 2004
“ We hereby certify that we have written this assignment respecting the rules set by ESC RENNES in terms
of plagiarism. Ref. ESC Rennes Dean’s memo of 6 th April 2004 (e-mail : 20/04/04)”
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2. Case Study
The Merger Between VIVENDI & SEAGRAM
Elements of the Analysis of the Case Study:
1. Vivendi Presentation.
2. Seagram Presentation.
3. The Personality & the Role of Jean-Marie Messier.
4. Reasons for Failure.
5. What Was Kept/Sold of Seagram by Vivendi?
6. What is Happening Today ?
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3. 
1- Vivendi Presentation:
Originally CGE, a company established in 1853 for Water distribution.
Jean-Marie Messier turns around the firm from a waste management company
to a multimedia conglomerate, concentrating around activities such as, utilities –
water, power – transport and communication – pay TV – telecom – internet
(spending more than € 15 billion in the latter area).
He also relaunched the firm under the name “Vivendi” (from the Latin verb
vivere: meaning “to live”) in 1998. 

2- Seagram Presentation:
Headquartered in Montreal, the Seagram Company Ltd, operates two core, global
businesses: beverages and entertainment/ communications.
The company employs 30 000 people worldwide.
Seagram’s distilled spirits, wines, fruit juices, coolers, and mixers are sold in more
than 150 countries and territories. Affiliates and joint ventures in 41 countries
comprise the largest distribution system in the spirits and wine industry.
Seagram’s entertainment/communications company, MCA Ins., makes motion
pictures, television and home video products, publishes books, produces recorded
music and operates theme parks.
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4. 3- The Personality & the Role of Jean-Marie Messier:
Jean-Marie Messier is an autocratic leader, egotist, showy, and risk-taker. He made
irrational expansion decisions partly to satisfy his ego by managing a bigger empire.
The Vivendi company could hardly keep - up with his spending appetite and
fondness of deal-making.
Jean-Marie Messier adopted an aggressive program for massive expansion /
acquisition which was mainly financed via debt.
This resulted in:
Increasing the financial risk for shareholders by the usage of higher financial
leverage.
Raising the agency cost of manging the company by creating a very
heterogeneous merger that was too much diversified to be managed efficiently.
Jean-Marie Messie committed the following:
Insider trading & front running: He personally bought US$ 25 million shares of
Vivendi’s and then tried to enhance the share price by making the company
buyback about 104 million of its own shares as treasury stock without telling the
board of directors.
Financial fraud & manipulation.
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5. 4- Reasons for Failure:
 Huge debt level.
 Bad management (especially cash management).
 Excessive and disorganized communication.
 Doubts o the firm’s accounts.
n
 Pessimism of financial analysts .
 Information given to public was insufficient. Messier lost credibility.
 Too many diversified assets, too many different industries.
5- What was kept/sold of Seagram by Vivendi?
The spirit e of the business was sold off to French Pernod - Ricard
nd
and British Diageo for € 7.5 billion.
Sale of healthcare and business publishing units for € 1.2 billion.
Sale of group Express
-Expansion, l’Etudiant and Comareg to Hersant’s
Socpresse for € 330 million.
Stake reduction in Vivendi Environment to 40.8%.
Sale of Elektrim Telekomunikacja stake.
Sale of Vivendi’s 50% share of Vizzavi for € 142 million.
Sale of 89% of Canal + Technologies to Thomson Multimedia for € 190 million.
Sale of EU and Latin American publishing units to Hachette for € 1.2 billion.
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6. Further sale of 20.4% Vivendi Environment for € 1.8 billion.
Sale of US film studios, theme parks and cable TV channels TO NBC.
Sale of MP3.Com to CNET.
6- What is Happening Today?
May 27, 2004 Vivendi Universal’s performance for the first quarter of 2004 showed
significant progress compared to a year ago.
June 1st, 2004 Standard & Poor’s raises Vivendi Universal back to investment grade.
June 23, 2004 Vivendi Universal Launches a E700 million bond issue.
June 25, 2004 Vivendi universal announces sale of Canal+Group’s stake in Sportive
for E274 million.
June 30, 2004 Vivendi Universal’s Tender Offer to Purchase its High Yield Notes
Successfully Completed.
September 1st, 2004 Vivendi Universal finalizes the sale of Babelsberg Studios in
Germany.
( Source: www.vivendiuniversal.com )
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